by Brandon Pemberton

The labor landscape is changing

Retailers have been moving from a professional sales force to entry-level sales associates over the past 40 years, and the impact of that shift is now being felt in store-level economics. This is particularly true with mass market retailers that have joined the ranks of QSR’s and fast casual restaurants employing primarily minimum wage workers. To the detriment of already shaky retail economics, statutory wage minimums are increasing at various rates across the country. This variation in state and municipal minimum wage rates creates challenges for retailers that operate across multiple states. And the outlook is good for employees, but grim for employers, as the wage rates are set to increase radically over the next two years. On top of the rising wages, employees are benefiting from a record-low unemployment rate that drives turnover in entry-level roles. Employers can’t keep entry level employees without promoting them, as they are able to earn up by moving to new companies. The cost of this turnover is not easily quantified. 

Big retailers are responding and leaving their peers behind

Some large retailers are getting ahead of labor issues by raising wage rates across the board. They are not letting store-level economics suffer from this decision, but rather cutting hours and services, even at-risk of compromising their customer service. Retailers who don’t do the same or find a better alternative will be under-water, risk closure and lose employees. Point B has helped our clients find that alternative.

There is a smarter way to execute by determining how to get more with less

Many retailers now think increasing wages is the solution to retention, but that is not always the case. Wages must rise, but only enough. Leading retailers are using data and analytics to approach identifying optimal wage rates across geographies.

Retailers must also retool the entire customer experience. Leading retailers are baking new optimized employee processes into new experiences that drive customer engagement, increase customer spend and encourage retention.

Retailers must understand that the role of the employee in retail will change. Leaders will factor this into new processes and employee engagement models. This will involve weaving technology into the way employees work, often freeing their time to focus more on customer interaction and driving customer experience.

Execute on these ideas utilizing a three-pronged approach

Use data and analytics to get the right people doing the right roles at the right times. To do this, make sure you can capture the right data at a store-level, who is doing what and when – and what does it cost you.  Often this leads to new staffing configurations and potentially different opening hours. Develop a way to execute on bespoke opening hours, as this could save significant payroll dollars without impacting customer experience. Finally, use this data to create dynamic dashboards that allow store managers to better schedule employees, creating greater visibility and scheduling stability. To do this well, organizations need consistent ways to capture data from POS and scheduling systems, a data pool to pull analysis, and visualize tools that can be accessed at both the corporate and store levels. The data and supporting analytics can reveal tremendous opportunity for efficient scheduling that controls costs and don’t compromise the customer experience.

Use lean practices to streamline work and reduce bloat. To do this, dig deep to understand which activities drive value. Time studies, process workshops and plenty of time talking to employees will provide the foundation for applying lean and continuous improvement best practices to the way your employees work. Your employees will appreciate this, as they know what wastes time. You might have to make major overhauls to roles, responsibilities and expected outcomes. The good news is this will benefit both employees and customers.

Finally, use employee engagement techniques to increase tenure. Your existing employees are valuable and should be retained, as the cost of training is understandably high. Leaders in employee retention transition significant portions of training costs to employee engagement and retention activities. Career planning is a powerful tool to drive retention.

To execute, you need to innovate; make sure you are ready

However, knowing what to do and how to do it is not enough. Retail organizations must be prepared to execute on labor-related innovation in order to deliver the value they originally sought. There are five key activities that can get retailers started:

  • Identify an executive sponsor to drive alignment and focus
  • Have an operating plan in place to drive quality execution
  • Make sure there is a change management specialist on the team to ensure employees feel and react to the change
  • Put KPIs in place, report against them and react
  • Develop a governance structure to drive results

The Bottom Line

Point B has helped leading retailers and restaurants develop and execute on these workforce management strategies in order to create competitive advantage. 

Retailers that can adapt quickly, develop changes to the way their employees work and execute will not only improve their store-level economics, they will also deliver better experiences for their customers and their store-level employees. If you are interested in learning more about how Point B can help, please contact Brandon Pemberton (bpemberton@pointb.com).